Why The GOP's Anti-Immigration Folly Is Economically Stupid, Part 2

In Part 1 we documented that the social insurance Ponzi is going into an accelerating collapse in part because the working age population is flat-lining. Compared to growth of 20 million prime age workers (25-64 years) per decade, as occurred between 1975 and 2005, there will be only 5 million new prime age workers per decade over 2015-2035----all of whom will be accounted for by immigrants.

Worse still, that radical deceleration is occurring at the very time that the Baby Boom is launching its sprint toward doubling the number of persons 65 and older from 50 million (2017) to over 100 million (2060). So during the next 40 years, the US economy desperately needs more potential workers, but the plummeting fertility rates of the last few decades are already baked into the demographic cake.

To wit, it's too late for America to get the future workers its needs from the hospital maternity wards; the only place to find enough new workers to prevent fiscal catastrophe is at the border crossings. We need already made babies---that is, immigrant labor--- and a giant guest worker program to accommodate them.

Unfortunately, the once and former party of fiscal austerity and free market economics has gone off the deep-end of statism and cultural chauvinism on the matter of immigration. As a result, the workingman's party built in modern times on President William McKinley's "full lunch pail" economics and the vast ranks of immigrant labor in America's Midwestern industrial belt has gone restrictionist, nativist, xenophobic and blindly intolerant.

The worst of it is the harsh law and order demagoguery ala the Donald's campaign launch imagery of June 2015:

 ......They're sending people that have lots of problems, and they're bringing those problems with us. They're bringing drugs. They're bringing crime. They're rapists. And some, I assume, are good people"

Needless to say, there's not a shred of truth to the immigrant crime meme beyond cherry-picked anecdotes about horrendous murders and assaults by illegals, which prove exactly nothing. Even the endlessly trumpeted San Francisco murder of Kate Steinle during July 2015, as tragic and insensible as it was, turns out to be a striking case of pure misdirection.

As established by the trial, the gun did not belong to the accused illegal immigrant (Garcia Zarate) and it turns out he didn't fire it on purpose. Zarate actually found what was a semi-automatic gun under a chair on Pier 14, which had been stolen from the Federal BLM, wrapped in a T-shirt and abandoned on the pier.

The gun accidentally fired when Zarate picked it up, causing the bullet to travel about 15 feet where it struck the pavement , left an impact mark and was flattened-----only to ricochet 100 feet or more, where it freakishly struck Steinle in the back while she was walking along the pier with her father.

As the defense attorney argued, even an expert marksman would have difficulty pulling off such a "skip shot."

The point, however, is not whether Zarate should have been convicted of manslaughter or some lesser crime given the circumstances (probably should have been), but the fact that the freakish sequence of events established in the trial had nothing to do with his status as an illegal alien.

That is, even a native-born derelict, or a careless juvenile or even an unsuspecting upright citizen could have triggered this one-in-ten-million event. Steinle's death was the result of what amounted to lightening striking randomly, not a porous border with Mexico.

Stated differently, there is a small fraction of every sub-population which consists of thugs, criminals and misanthropes. What is is relevant in the present instance, however, is the statistical incidence of these anti-social behaviors, not sensationalized anecdotes.

And on that score, it is also crucial to start with a fact long known to students of crime, if not demagogic politicians. Namely, violent crimes and property theft are overwhelmingly attributable to young men.

So when you standardize the crime statistics for the native-born versus immigrant population for that crucial variable (men age 18-39), the data is crystal clear. Native-born young men commit crimes at 2-3 times higher rates than do immigrants, as measured by incarceration rates. And that gap has not diminished during the last three decades---even as incarceration rates for both groups having risen moderately,  mainly owing to the War on Drugs.

Image result for images of crime rates for native born vs. immigrants

In point of fact, the only time that illegals and immigrants are statistically involved in a high incidence of "crime" is when they are engaged in the violent, law-of-the-jungle business of selling and distributing illegal drugs.

But as we will show in Part 3, drug crime is not an import. It is a home-grown scourge fostered by the state because "prohibition" invariably drives distribution underground and the price of the contraband (in this case illegal drugs) sky-high. The resulting massive scarcity or surplus profit in the supply chain provides a powerful incentive for violent behavior and provides the financial wherewithal to support the extensive criminal syndicates and lower level gangs which feed off the trade.

Consequently, you do not need Mexican Walls, more ICE agents or additional hobnailed boots in the DEA (Drug Enforcement Agency) to stop these needless scourges. Just legalize all drugs and let the equivalent of Phillip Morris and the teamsters union truck drivers handle their sales and distribution.

Indeed, the often brutal violence that does occur along the US-Mexico border is most definitely not perpetrated by desperate parents willing to kill in order to find work on the US side of the border to support their families.

Instead, it's the result of drug syndicate warfare over territory and trade, and the heavy-handed---often militarized -----effort of the DEA, Border Patrol and local law enforcement to accomplish the impossible. That is, interdict and extinguish the ultra-lucrative commerce in illicit drugs, which their futile efforts at restricting supply, ironically, make even more insanely lucrative.

Moreover, notwithstanding the illegal drug trade noise in the data, the immigrant crime story still doesn't wash. The fact is, at the very time that the inflow of immigrants has surged, violent crime rates in the US have fallen dramatically.

Thus, during the 28-year interval between 1960 and 1988, total immigration was  just 12.3 million or about 440k persons per year. After that, immigration rates surged by 2.3X: The inflow averaged 1.01 million per year during 1989-2016 and totaled 28.5 million over the period.

Accordingly, the foreign born share of the US population climbed sharply after 1990, rising from 6.0% to 13.0%. Still, the rate of violent crime in the US fell by 50% through 2012 and has more or less plateaued since then on a nationwide basis (despite flare-ups in a few aberrant cities like Baltimore and Chicago).

Image result for images of crime rates for native born and foreign born americans

Nor is the above especially surprising when the absolute source of US crime incidence is broken out. To wit, US citizen account for 90% to 98% of all major crime categories, save for drug trafficking and the self-evident role of illegal immigrants in bringing illegal drugs across the border.

Equally notable is the fact that the estimated 11 million illegal immigrants committed a slightly smaller share of these crimes (other than drug trafficking) than their 3.5% share of the U.S. population. And the same is true of the 14 million immigrants who have legal status (Note: There were 44.7 million foreign-born residents in the US in 2015, of which 20 million were naturalized citizens, 11 million were undocumented and about 14 million had temporary or permanent legal status).

Native-born Americans commit a lot more crime than immigrants

So at the end of the day, the immigrant crime story is a complete red herring. Instead, the underlying motivation is a faulty zero-sum economic theory, and the rise of a nativist chauvinism that glorifies a mythical American "nation" that never really existed.

Unlike most other more homogenous nation-states on the planet, in fact, America was never rooted in a tribe, folk, people or nationality. To the contrary, it was a vast melting pot of diverse ethnicities and nationalities bound together by the ideas of personal liberty, constitutional democracy and free market opportunity and prosperity, not the kind of chauvinistic nationalism propagated by today's GOP anti-immigrant caucus.

Indeed, the latter impulse has become so militant and vehement that it tends to obfuscate the stupid economics and the threadbare nationalism on which the GOP's anti-immigrant campaign has been based.

For instance, the heated rhetoric about undocumented immigrants being some kind of egregious class of law-breakers is unwarranted and irrational. Aside from the special case of the government induced illegal drug business (see part 3), the only legal infraction committed by the overwhelming share of the 11 million undocumenteds is the misdemeanor of crossing the US border without a visa, green card or other legal authorization.

Yet this "crime" is essentially victimless, thoroughly un-American and capable of being eliminated by the stroke of a simple statute. Namely, one authorizing the issuance of guest worker papers at the border to any worker and his family members who want to come to the US to take a job.

Indeed, if you legalize drugs and legalize work by foreigners, virtually the entirety of immigrant crime would disappear. That is, the drug trade originated felonies against persons and property would vanish and the misdemeanors for not having the requisite papers (or felonies owing to entering the US "illegally" more than once) would never happen.

Needless to say, America's greatest period of growth and prosperity from 1870 to 1914 was built on exactly that principle. The only documents work-seeking immigrants needed was to sign-in at Ellis Island. There were, in fact, no passports to enter the US until May 1918, and even that was the result of the anti-German hysteria elicited by Woodrow Wilson's phony patriotism and crusade to make the world safe for his foggy brand of "democracy".

Thus, in 1870 the population of the US was just 38.6 million. During the next 44 years more than 25 million immigrants entered the country---a figure which represented nearly two-thirds of the 1870 population!

Yet notwithstanding a half dozen short-lived recessions or "panics" during that interval, real GDP growth averaged 3.8% per year for more than f0ur decades running. That level of continuous growth had not been achieved before, nor has it since.

During 1907, for example, 1.3 million immigrants entered the US, representing more than 1.5% of the existing US population (85 million), and in a single year.

Obviously, that pales into insignificance the current hysterical claims that America is being over-run with immigrants. During 2016, by contrast, the immigrant inflow of virtually the same number (1.2 million) amounted to just 0.4% of the nation's 325 million population.

Moreover, immigrants during the pre-1914 golden age of growth represented a far larger share of the work force. Without them, the booming industrial belt from Pittsburg through Youngstown, Cleveland, Detroit, Chicago and the Quad cities of Iowa simply would have never happened.

As is evident in the chart below, the foreign born population peaked at just under 15% during 1890 to 1914, and then began a long descent. It was triggered initially by the interruption of global commerce and labor mobility during WWI and then the restrictive immigration act of 1924. The latter established immigration quotas based on national origin for Europeans, but did not restrict immigrations from the western hemisphere, including the Donald's sh*thole countries of present renown.

So while total immigration was cut by 70% from the pre-1914 peak levels, it still exceeded 300,000 persons per year during the economic boom of the late 1920s. What caused the annual inflow to collapse to barely 50,000 per year during the 1930s was the Great Depression. Foreigners stopped coming when there was no work or economic opportunity----even when the new quotas would have permitted far larger numbers.

After prosperity returned in the mid-1950s, annual inflows rebounded to the 300,000 per year level as permitted by the national origin quotas. The latter amounted to 2% annually of the 1890 level of foreign-born persons in the US from each European country, which favored northern European nationals, and also excluded Asians entirely.

At length, however, the national origin system became unworkable, unfair and increasingly obsolete--so it was abolished in 1965.

But its replacement was hardly any better since it was not governed by economics and work-seeking. Instead, 6% of the total quota was reserved for refugees---with the balance allocated to family reunification (74%), professionals, scientists and artists (10%) and workers in short supply (10%) to be later defined by bureaucrats and business lobbyists. Subsequently, the Refugee Act of 1980 detached refugee admissions from the overall quota system and set up comprehensive procedures for handling refugees.

Stated differently, the economically based, work-driven, quota-free system that prevailed prior to 1914, and which had worked so brilliantly to fuel America's industrial might, was replaced by a politically driven system. The latter shifted the determinants of the flow and composition of immigration from the free market to the legislative and bureaucratic arenas of the state, and to the vast networks of influence peddling and lobbying which drive their action.

Not surprisingly, this evolution has increasingly turned immigration into a matter of pure partisanship---with the Dems looking for a route to electoral dominance through an immigration fueled increase in the non-white population, while the GOP fights a nativist rearguard action to preserve the electoral dominance of its Red State coalitions.

Still, the dramatic rebound in the foreign born share of the US population since the 1965 Act became law was overwhelmingly driven by economics and work-seeking-----the agricultural industries, hotel and restaurant sectors, lawn and home care, domestic service and countless more lower-skilled sectors are testament to that truth; and notwithstanding Washington's endless politically-inspired battles over the machinery of immigration control.

But with the native-born working age population set to shrink by nearly 10 million over the next two decades, all time for the nativist chauvinism being propagated by the GOP anti-immigration caucus has finally expired.












A 1990s head of the former INS (immigration and naturalization service) recently observed the obvious. The GOP's policy is now so out of step with economic realities that it has become a source of serious economic harm.

“When your laws don’t align with the market, then the market is always going to win,” Ms. Meissner said.

The stupid argument made in behalf of prohibiting willing immigrants from committing acts of commerce (i.e. taking jobs at the offer price) is that these undocumented workers are taking jobs from Americans and causing wages to be bid lower.

Let's see. When your editor first came to Washington in the early 1970, he was visited by a lobbyist from the building trades union carrying a sack of cash for his boss' next campaign. Needless to say, the union man was thrown out of the office forthwith-----along with his argument that "fureners" and scabs were threatening union pay scales.

Actually, they were, and for good reason. Union monopolies were actually contributing to an inflationary cost spiral and a consequent reduction in real output and wealth. For the construction sector to prosper and the economy to grow, the market needed to clear wage rates at competitive levels.

Back then Republican understood what amounts to nothing more than the free market doing god's work. Today they are so focused on manipulating the immigration rules for electoral advantage that they have forgotten entirely these crucial principles.

In Part 3, we will debunk the modern day building trades arguments of the GOP immigrant-thumpers and explain why a shift to pre-1914 work- and economics-driven immigration policy can not come too soon.































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